An Election Year Sales Tax Holiday?

December 12, 1999

Nothing like flush times and a few extra dollars in the pocket to help people forget about hard times . . . and even some unpaid bills.

No sooner did the State of Illinois post its third straight budget surplus--the most recent one, for fiscal 1999, totaling $503 million--than legislators began talking about voting a tax cut next year.

And not just any tax cut, but a (drum roll here) sales tax holiday. Senate President James "Pate" Philip (R-Wood Dale) even has suggested the ideal month: September, when a lot of parents do their back-to-school shopping.

Surely it never crossed Pate's mind that this would also be a few weeks before next fall's general election. That election, lest anyone forget, will decide control of the narrowly split General Assembly as it begins the crucial decennial redistricting process. That's probably why House Speaker Michael Madigan (D-Chicago) is having Democrats from swing districts lead the charge in his caucus.

Here's a chance for Gov. George Ryan to be the sobersided statesman, cool down this fever and make sure the legislature first answers some important questions. For starters:

- Whatever happened to the solid idea of establishing a "rainy day" fund of 2 to 5 percent of general revenues as a hedge against the next economic downturn? Only a handful of states still operate hand-to-mouth without such a cushion. What better time to create one?

- Whatever happened to the long-range goal of having the state fund half the cost of public schools, as is called for in the Illinois Constitution? Granted, recent funding increases have pushed the state's share close to 40 percent, but is that good enough?

- What about other needs and opportunities, such as restoration of cuts made to the Medicaid program back when the state had $1 billion in unpaid medical bills, or the maintenance backlog on state highways, or the eventual need to rebuild the toll roads?

If it is determined, after those questions are responsibly answered, that there's still enough for a tax cut, is a sales tax holiday the best way? It's certainly the loudest, what with all the advertising stores are sure to do, but wouldn't an increase in the personal income tax exemption be a more widespread and progressive way to spread the benefit?

It may turn out that a limited sales tax holiday, which has the advantage of impermanency, is the way to go. But first Gov. Ryan and the legislature must prove the state can afford it and that it's wiser than other kinds of tax cuts. Not just louder.